Impact Of Working Capital Management On Profitability In Case Of Assela Malt Factory

Abstract

The objective of this study was to examine the impact of working capital management on profitability in case of Assela malt factory. To achieve the objective the researcher is used explanatory research design and quantitative data is collected from Assela Malt fact ory. The study covers ten years data from 2011 up to 2021 used. Descriptive statics, correlation and multiple regressions is employed to analyses the collected data with the help of Eviews 8 statistical software. In order to see relationship between working capital management and profitability of the factory the study is employ profitability as dependent variable, Average collection period, inventory holding period, average payable period and cash conversion cycle are independent variables and firm size, sales growth rate, firm leverage and current ratio are control variables. The Fixed effect regression result of the first model shows that ROA was positively affected by Average collection period, inventory holding period, current ratio and firm leverage but it was negatively affected by average payment period, cash conversion cycle and sales growth rate. Total debt to total asset ratio, Average collection period, inventory holding period, and Firm size has positive and significant relationship with ROA. However, APP and CCC has negative and significant relationship with ROA.